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Managing Your Money

How to Calculate Your Available Home Equity in Texas

Written by Ron Gross
Published February 12, 2019
Calculate your available equity according to the state of Texas guidelines for 80% LTV Calculate your available equity according to the state of Texas guidelines for 80% LTV

Maybe you have some home improvement projects you've meant to take care of, or maybe it's time to get that new car or truck you wanted. If so, it might be a good time to think about a home equity loan. These loans provide you with the money you need using the equity built in your home. And they do so at a much lower interest rate than other types of loans. Do you know how much equity you have built up in your home?

Calculating Your Available Equity

Don't worry, figuring out how much home equity you have to borrow against isn't that hard to do. In the most basic terms, the way you figure out how much equity you have built up in your home is by taking your home's fair market value (you get this by looking at your county tax appraised value) and subtract your mortgage balance from that. Let's say you bought your house for $200,000 and there was a housing boom and now your home is worth $300,000. You were able to pay off $100,000 of your initial mortgage loan leaving you with $100,000 left to pay. So, take the current worth of the home ($300,000) and subtract the balance left on your loan ($100,000) and you get the equity on your home ($200,000). The laws in the State of Texas do not allow you to take all that money out, however.

The Texas Difference (80% LTV Rule)

Since you live in the great state of Texas, you already know things are done a little different around here, this applies to home equity loans and HELOCs (Home Equity Line of Credit) too. In Texas, the state requires that the sum of a home equity loan plus any other mortgage balance the homeowner has MUST be equal to or less than 80% of the home's appraised value. In other words, what you have left to pay on your mortgage loan, plus any other loans you have borrowed against your home can't be more than 80% of the current market value of your home. If we look at the example from above and take the current appraised value of the home, which was $300,000, 80% (the Texas limit) of that is $276,000. Subtract what you still owe on your mortgage $100,00 and your equity is $176,000. That would be $176,000 in equity that you could borrow.

Get Started on Your Home Equity Loan

You should now know if you have enough equity built in your home to qualify for a home equity loan or HELOC. If you want the loan soon, you will need to start the process right away, because in Texas the home equity loan process takes about three to four weeks.

If you don't have enough equity and still need that loan, don't fret! There are other loan types like personal loans or vehicle title loans that help you get the funds you need. Either way, the Credit Union of Texas(CUTX) is a good place to start. From home equity loans to car loans, visit our web page CUTX.org for more information on all of CUTX's loan offerings. You can also speak to a CUTX equity expert by calling us at 972-263-9497.

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